Talking Head: Pick up any pension magazine at the moment and you’re likely to find a lot of stories about auto-enrolment. Unsurprisingly, given that 1.8m small employers are starting to stage this year, there is a lot of talk about the challenges they might face.
If you’ve read any of these, you might find our latest insights into these employers, the first of their kind, a bit of a surprise.
At Nest we have been preparing for large volumes of small employers since day one, so we know it is important to be aware of the obstacles they might face.
Our insights show that small employers are finding auto-enrolment a lot more straightforward than anticipated
We are now seeing around 500 small employers stage each day; that is one every minute.
But we have actually been dealing with around 4,000 of the smallest employers since last June. We have kept in touch to see how they have fared, and in many respects they are defying industry expectations.
Our insights show that small employers are finding auto-enrolment a lot more straightforward than anticipated.
It is true that many do not have an HR department or a manager dedicated to HR, but their small size and simpler processes mean they are likely to be paying contributions at the same rate and frequency for all their workers and from a single bank account.
Straightforward process
Smaller employers are also less likely to use their waiting period than their larger counterparts. Just 29 per cent of small employers and 26 per cent of micro employers are enrolling their workers in the three-month period after their staging month, compared with 44 per cent of larger employers. Small employers appear to be getting on with auto-enrolment, and doing so without delay.
We are even seeing that they are using Nest in a straightforward way. A recent survey of small employers using us found a large majority (72 per cent) say they expect to rarely or never call Nest in the future.
This is backed up by other Nest research, which suggests that in the future, most expect managing auto-enrolment to be very easy and not time-consuming.
We have always had to be ready for the high volumes of employers coming through from this year onwards and we have worked consistently to streamline our online systems so it takes just a few simple steps to set up. It’s good to see this work paying off.
These findings are really encouraging for the industry. We all have to deal with the large numbers of employers coming through this year, so we hope that by sharing these insights we are able to contribute to a clearer understanding of how small and micro employers may fare.
Gavin Perera-Betts is executive director of product and marketing at Nest
